Effective stakeholder engagement and relationships are central to a sustainable business model. Brand experiences are the key.

1. © 2014 Quirk’s Marketing Research Review (www.quirks.com). Reprinted with permission from the April 2014 issue.
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WWe may look back on 2013 as the year, after a 30-year journey, when phrases such as “profit
with purpose,” “conscious capitalism” and “shared value” finally migrated from B-schools,
think-tanks and a relative handful of innovative companies and entered the popular lexi-
con of business and society in general.
In the slow recovery from the global financial crisis – and fuelled by growing aware-
ness that social media and global digital connection have empowered consumers in ways
that few business leaders imagined even just a decade ago – companies across the entire
business spectrum are now embracing sustainable business models.
Among recent comments, these three are representative:
“I don’t subscribe to the notion that companies exist to create value strictly for their shareholders. I think they
are there to create value for their customers, and that gets to the mission of the company. And ultimately, doing
that, they create value for society.”
Bill George, retired CEO of medical devices manufacturer Medtronic in a December 2013 inter-
view with McKinsey.
“Profitability is a shallow goal if it doesn’t have a real purpose and the purpose has to be share the profits with
others. We are equally proud of what we are doing in the community, what we are doing with our people and how
the company has built itself around a purpose that is not just about making money.”
Howard Schultz, Starbucks CEO, in a September 2013 CNBC Mad Money interview.
“Business does not operate in a vacuum – it operates under a license from society. We recognized early that
when we transform our business to deliver for our customers, protect our environment and invest in our employees,
we achieve sustained value. In fact, these actions fuel our financial returns.”
Indra Nooyi, PepsiCo Chairman and CEO, in a 2012 letter to shareholders.
How companies
can create, monitor
and manage brand
experiences and
successful stakeholder
relationships.
quirks.com/articles • ID 20140411
••• corporate sustainability research
Moving beyond
us and them
The value of stakeholder engagement
| By Mark Stapylton
snapshot
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Formerly lone voices, high-pro-
file standard-bearers such as these
now find themselves at the center
of the conversation.
Every available touchpoint
In recent years, a series of paradigm
shifts have occurred in the relationships
between brands and consumers, and
between companies and their sharehold-
ers. Brands are creating meaningful
and personally relevant experiences
and engaging with consumers through
every available touchpoint, not just by
building awareness through mass media;
consumers are increasingly motivated
to participate with brands through co-
creation and co-ownership. Companies
are adopting sustainable practices that
integrate the triple bottom line-thinking
of “profit, people and planet” into the
core of their business models and pur-
pose; shareholders have found they now
compete for primacy with customers and
a whole raft of other stakeholders.
There are many elements of a compa-
ny’s sustainable performance that can be
quantified or objectively measured. Best-
practice reporting protocols are offered
by organizations such as ISO and the
Global Reporting Initiative. But whether
or not the company receives credit for its
actions – and therefore achieves the full
range of desirable outcomes and returns
sought – is hugely dependent on the
subjective perceptions and opinions of
its stakeholders. In a very real sense the
performance of a company is whatever its
stakeholders believe it to be.
Thus, sustainability is a reputational
issue. As marketers, corporate communi-
cations experts and market researchers
specializing in branding, loyalty, commit-
ment and satisfaction have long known,
a company’s reputation can at best be
subtly managed but it cannot ultimately
be controlled. Corporate reputations, in-
cluding reputations for sustainable busi-
ness commitments, can be influenced by
anyone who chooses to have an opinion.
All of which begs the question: If
sustainability is a reputational issue, how
does a company create and nurture the
kinds of relationships with stakeholders
that are founded on shared values, mutu-
ality and reciprocity and that promote en-
gagement and advocacy? And how should
these relationships be measured and moni-
tored so they can be better managed?
Identify relevant stakeholders
At the simplest level, companies devel-
oping and implementing a sustainable
business model (for a product or corpo-
rate brand) will first identify their key
relevant stakeholders; then develop and
test messages that resonate in positive,
emotional and intentional ways with
each stakeholder group. They implement
communication programs targeted to
those stakeholder groups and engage in
dialogue with them; monitor the impacts
on stakeholder engagement; and experi-
ence a positive feedback loop or virtuous
cycle of desirable outcomes that enable
them to pursue their purpose more profit-
ably, with more support and less friction.
Stakeholders, literally, include
anyone who chooses to have an opinion
about the brand or company. Categories of
stakeholder include internal groups (em-
ployees, owners and managers), share-
holders, those who transact with the
company (the supply chain of suppliers,
vendors and resellers), influencers (ana-
lysts, interest groups and the media) and
regulators (government, policy makers).
Stakeholders today are better-informed
about a company’s values and actions.
They are increasingly sophisticated, savvy
and skeptical about corporate commu-
nications. Greater transparency means
they hold companies to a higher standard
than before. They expect a meaningful
two-way dialogue and conversation with
companies. They may withhold approval
from (or even punish) companies whose
values and actions they perceive to be
inconsistent with their own.
The goal of communication is to pro-
mote engagement. In order for companies
to be able to pursue and execute their pur-
pose without friction and get full credit
for their sustainable business practices
and citizenship commitments, they need
the acceptance, permission and advocacy
of relevant stakeholders.
Engaging effectively with stakehold-
People
social
Profit
financial
Planet
environmental
Triple Bottom Line of Sustainable Business Models
Air and water quality
Energy consumption
Resource management
Waste management
Product responsibility
Employee retention
Labor practices
Fair trade
Community impacts
Human rights impacts
Cause marketing
Revenue
Margin
Cash flow
Sales growth
ROI
Job creation
Figure 1
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ers means finding common cause and
shared values. Stakeholders want to
transact with and have relationships
with companies whose values are consis-
tent with and supportive of their own.
It makes sense to adapt a traditional
“hierarchy of engagement” framework to
specifically address the types of relation-
ships that companies need to have with
stakeholders and where sustainable prac-
tices and good citizenship are integral to
the company’s purpose and values. The
hierarchy we have developed models four
levels of engagement:
Understanding often begins with
simply seeing and hearing other people
talk about a company. Familiarity and
knowledge build over time with aware-
ness and experience. When a stake-
holder understands what the company
stands for, there is a foundation for
engagement to occur.
Affinity may occur when an under-
standing of what the company stands for
is a fit with the stakeholder’s personal
values. When these values are shared,
the stakeholder may identify with the
company (connection), may become loyal
(commitment) and may recognize it
strives to deliver on its promises and com-
mitments (belief).
Involvement. Stakeholders who iden-
tify with the company may get involved
with the company (participation) or “go
the extra mile” to transact or interact
(conviction). In fact, the positive involve-
ment the company seeks cannot occur
without affinity: it implies reciprocity
and mutuality.
Advocacy, the Holy Grail of effective
stakeholder engagement, is the ultimate
expression of a stakeholder-company
relationship. It may occur when a
stakeholder is sufficiently invested in
the company’s purpose that they will
actively help and support, endorse and
encourage, the company.
Encourage relationships to form
Effective stakeholder engagement be-
gins with developing effective messages
that encourage relationships to form. As
the old aphorism goes: “A good relation-
ship is when someone accepts your past,
supports your present and encourages
your future.” Relationships connect the
stakeholder to the company, just as they
connect consumers to brands. Decoding
these relationships is key to creating
the basis for engagement.
A relationship is self-evidently a two-
way construct. Most communication strat-
egies however focus only on one direction,
that is, the company’s promise to the
stakeholder. They may ignore the recipro-
cal element of how the stakeholder experi-
ences or relates to the company. Because
experiences are so often overlooked when
developing a communication strategy,
they can be more valuable than expected
as a source of competitive advantage – as
well being insightful for messaging and
tone of marketing communications.
Relationships, even in business, are
inherently more emotional than ratio-
nal. Stakeholders’ responses to a com-
pany may be emotional and unconscious
and strongly influenced by the attitudes
and behaviors of others. Engaging with
stakeholders so as to execute corporate
strategies with a beneficial outcome
and the least possible friction means
viewing engagement as emotional and
comprising the sum of all perceptions,
attitudes, beliefs and expectations that
stakeholders have about a company in
relation to their own agenda.
In proprietary research conducted in
2012 the author and colleagues explored
how certain promises (perceptions,
imagery, equities), when combined with
certain experiences, can create relation-
ships that have emergent or superaddi-
tive properties (i.e., these combinations
of promise and experience have greater
than predicted impacts on market value).
The research identifies five such “power
relationships” based on analysis of 48
mono-brands and corporate brands across
nine different B2B and consumer cat-
egories among 1,500 survey respondents.
Four of the power relationship types are
particularly relevant to corporate com-
munication and dialogue about sustain-
able business models (Figure 3).
Reinforcement. Superior company or
brand performance and high satisfaction
that makes me feel and look better and
smarter to others.
Identification. I am strongly at-
tached to the company/brand; it commu-
nicates to others who I am.
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Role Model. The company/brand’s
charisma makes it a leader and helps me
be one also.
Self-Differentiating. The company/
brand’s difference includes me and makes
me feel different too.
The power relationships each embody
a different type of experience.
Self-Esteem is the experience of
making one look good to others and feel-
ing good about oneself. When coupled
with a perception of superior perfor-
mance it produces a relationship based
on Reinforcement. Oil companies and
personal care companies index high on
Self-Esteem and Reinforcement. (So too
did the presidential candidates in the
run-up to the 2012 elections.)
Self-Expression is the experience of
helping one to express oneself, free-
ing one to be oneself and simplifying
one’s life. When associated with strong
emotional attachment it forms a relation-
ship characterized by identification.
Compared to other categories, credit card
companies, mass-market retailers and e-
tail companies such as Amazon all index
highly on Identification. (It is no ac-
cident that credit card companies market
“affinity cards”).
Mentoring is the experience of
being challenged to think differently,
taught, inspired and having shared
values. When a company or brand is
perceived to have charisma (is a leader,
progressive, dynamic and excitingly
innovative) and the stakeholder experi-
ences being mentored or inspired, a
Role Model relationship is formed.
Relative to other categories, banks, cor-
porate brands such as 3M and GE and
digital companies (Google, YouTube,
Facebook) tend to index high on Role
Model relationships.
There For Me experiences have
to do with empathy and responsive-
ness: appreciating my business, being
recommended by people I care about,
responding to my needs and having my
interests at heart. When the company is
also perceived as distinctive and unique
in positive ways, the relationship can
be characterized as Self-Differentiating.
Casual dining (including brands such as
Olive Garden, Outback Steakhouse and
Applebee’s) index highly here (as well
as on Entertaining relationships based
on relaxed stylish perceptions and plea-
surable experiences).
Constantly changing
The relationships between stakehold-
ers and companies (just as between
brands and consumers) are constantly
changing in today’s digitally-connect-
ed world. Stakeholders increasingly
esteem companies that they believe
fundamentally understand them and
that interact with them in human
ways. And, importantly, they expect to
have access. Companies are responding
by creating opportunities through a
wide range of touchpoints for person-
ally relevant meaningful experiences
to occur. The relationships that form
as a result, involving elements of
co-creation, co-ownership and shared
interest, make possible a range of de-
sirable outcomes including increased
loyalty, satisfaction and advocacy,
increased profitability, social license
(permission and acceptance), risk miti-
gation and improved talent acquisition
and retention (Figure 6).
Researchers have an invaluable
role to play in key areas such as: iden-
tifying the relative importance of vari-
ous stakeholder groups; identifying
the areas of interest and the emotional
triggers for each stakeholder group;
determining the types of experience
and relationship that will resonate
on an emotional level and promote
engagement; evaluating the content,
tone and style of messaging; measur-
ing the depth of engagement; and
monitoring outcomes and performance
against key indicators.
Mark Stapylton is president of
BrandPanorama Research and Consulting
LLC, Rhinebeck, N.Y. He can be reached
at 845-702-2045 or at mark.stapylton@
brandpanorama.com.
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